The euro setting itself for a move higher on Tuesday
As the final month of the year has started, we are seeing some serious moves taking place in binary options on the EUR/USD forex pair. While the European Central Bank prepares for its last meeting of the year on Thursday, the US data from the holiday season is weighing on the US dollar at this point in time.
The Euro has been fairly resilient in light of the weak economic data which came out of the Euro Zone this morning.The manufacturing PMI data from Germany came in at 49.5, which indicates that during the month of November the sector has actually contracted (this is conditional on above or below the 50 mark)
After this disappointing release, the Gross Domestic Product (GDP) of Italy also came in lower than expected which proved to be a crucial take away for economists. Many now claim that unless the Italian government engages in a substantial labor market reform, there won't be chances for much growth in the long term.
Despite the data headwinds, the single European currency has shot higher today, topping out around 1.2506 before pulling back towards 1.2470 after influential U.S. central banker Dudley said that a rate hike in the United States in the first half of 2015 seems a reasonable scenario.
The markets have replied with US dollar buying and the EURUSD pair is still currently trading around 1.2470. However we are holding the view that this is only temporary, so in trading on Tuesday we are looking to buy daily calls should the price go lower than 1.2450.
A reverse of this scenario would be a break below 1.2420 on a sustained hourly basis. With the main support line for the EUR/USD forex pair somewhere between 1.2420 and 1.2430, we would be buying daily puts on a break below.
On the upside, the main challenge for the pair remains a test above 1.2510, which will open the door for a move towards 1.2550 and 1.2600. To sum up, for now, as mentioned earlier, we would be looking to buy daily calls around 1.2450 on the EUR/USD.